Carly Fiorina, Chairman and CEO of HP, holds an HP iPod during a keynote address of the Consumer Electronics Show at the Las Vegas Convention Center Hilton Hotel Thursday, Jan. 8, 2004. HP announced a partnership with Apple.(AP Photo/Joe Cavaretta) less

Carly Fiorina, Chairman and CEO of HP, holds an HP iPod during a keynote address of the Consumer Electronics Show at the Las Vegas Convention Center Hilton Hotel Thursday, Jan. 8, 2004. HP announced a ... more

Photo: JOE CAVARETTA

Photo: JOE CAVARETTA

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Carly Fiorina, Chairman and CEO of HP, holds an HP iPod during a keynote address of the Consumer Electronics Show at the Las Vegas Convention Center Hilton Hotel Thursday, Jan. 8, 2004. HP announced a partnership with Apple.(AP Photo/Joe Cavaretta) less

Carly Fiorina, Chairman and CEO of HP, holds an HP iPod during a keynote address of the Consumer Electronics Show at the Las Vegas Convention Center Hilton Hotel Thursday, Jan. 8, 2004. HP announced a ... more

2004-01-09 04:00:00 PDT Washington -- Economists largely agreed with the high-tech industry's outspoken defense of moving jobs to India and China but noted this time the principle applies to a group unaccustomed to losing their jobs to overseas competition: highly educated and highly paid white-collar workers in Silicon Valley.

Comments made in Washington on Tuesday by Carly Fiorina, CEO of Palo Alto information technology giant Hewlett-Packard, and Craig Barrett, chief executive of Santa Clara chipmaker Intel Corp., drew an unusually strong reaction from workers, who suggested the pair forfeit their own highly paid jobs to Chinese or Russian executives working for a quarter of their pay.

Fiorina's statement that "there is no job that is America's God-given right anymore" triggered particularly strong reaction. The pair spoke in Washington representing the Computer Systems Policy Project, a group of eight chief executives from the nation's top information technology firms.

They sought to head off rising protectionist sentiment in Congress by urging that the only way to protect U.S. high-tech jobs over the long haul was to become more competitive.

Warning that the U.S. lead in high technology is in serious jeopardy from competition from other nations, they outlined a long-term agenda to improve grade-school and high-school education, double federal spending on basic research in the physical sciences and form a national policy to promote high- speed broadband communications networks, as Japan and Korea have done.

The CSPP report, called "Choose to Compete," states that the tech industry faces a serious competitive challenge from many countries abroad with highly skilled labor and increasing industrial sophistication, but it argues against protection. "Retreating from global competition is a certain prescription for failure," the report said.

The report says many new jobs will be available when the economy fully recovers, but it asks, "Who will land these jobs? Not the millions of American students who graduate from high school without basic reading, writing and mathematics skills. Not the astonishing number of American students -- upwards of 25 percent -- who drop out of school."

But with unemployment at 7.2 percent in Santa Clara County in November, the latest figure available, Fiorina's statement hit a sore spot.

"I am curious how Ms. Fiorina would feel about her job being outsourced to China or India," Sean Ryan of Alameda, where the county unemployment rate is 6.1 percent, wrote in a representative e-mail to The Chronicle. "I am certain that there are many extremely bright, ambitious and successful executive types in those countries who would be able to do her job just as well if not better than she can at a cost savings to HP shareholders of millions of dollars per year."

Many Bay Area residents argued that it was the low wages in India and China that were motivating Silicon Valley corporations, not a lack of skilled U.S. workers. Some argued for "Buy America" campaigns and greater U.S. self- sufficiency.

"I have many, many friends who are unemployed, and continue to be so because they are 'over-qualified' or 'not a good fit' for a particular position," one tech worker at Bechtel Corp. in Seattle wrote. "I'm talking about people with degrees from Caltech and Stanford. ... It's not that Indians and Chinese are better educated. It's that they'll work for cheap, and they'll work for what most Americans couldn't live on. That's the issue."

But economists view the changes in Silicon Valley as an inevitable byproduct of the continuing flux of dynamic economies, termed "creative destruction" by the famous economist Joseph Schumpeter.

They say the alarm in Silicon Valley about job losses to India and China is no different from equally painful dislocations in older U.S. industries such as steel, apparel, textiles and agriculture as the world increasingly moves to a global market.

"Creative destruction goes on all the time in any economy. Certain things pass, and other things take their place," said Sydney Weintraub, a political economist at the Center for Strategic and International Studies. "The reason this is getting more attention than a lot of others is the people involved are relatively higher-wage people who are able to complain a lot more and know how to use publicity and have political influence."

Labor unions have battled "offshoring," which Fiorina calls "right- shoring," for decades, he said. "It's hard on people, but I don't understand how you pick and choose among the jobs you want to save and protect against and not expect people to do the same to you."

Sen. Barbara Boxer, D-Calif., agrees with the high-tech executives that improving education is critical, and she cites a raft of legislation she has proposed to help the tech industry compete, including a proposal to expand wireless broadband access, which the Federal Communications Commission is in the process of largely adopting, and providing a one-time tax break for companies operating overseas to bring their profits back into the United States.

"For a long time I have said we need to make education our No. 1 priority, " Boxer said. "And we need to invest in high-tech infrastructure to stay on the cutting edge of this vital industry."

Dan Griswold, associate director of the Center for Trade Policy Studies at the libertarian Cato Institute, asked, "Did we have a God-given right to 2 million people working in the railroad industry in the 1920s? What if we had tried to hold onto every T-shirt factory and every basic semiconductor plant? We'd be a poorer nation for it."

Weintraub concedes that such changes are very hard on laid-off workers, but he said, "It's probably much harder on people with lower educations, because they have fewer alternatives to find other jobs than do these people."

He says the tech executives' prescriptions for better education and more basic research and infrastructure investment are correct. For workers, he said, "You have safety nets for people, if they're lower income, to subsidize them until they can find other jobs or perhaps even subsidize them if they find worse jobs. And the higher-income people, I think the only real options for them in the future are more innovation and other jobs."

Proposals by some Democratic presidential candidates and both parties in Congress to retaliate against China or India or to prevent U.S. corporations from expanding overseas would backfire, many economists say.

"I think (Fiorina) is absolutely right if she meant that we can't expect to continue doing exactly the same things we're doing today on into the future, " Griswold said.